Enterprise zones in Malawi
At the end of 1989, Small Business Volunteer Frank Giarrizzo arrived in Malawi - a small, land-locked, African nation, the fifth poorest in the world - to work with USAID's Rural Enterprises and Agribusiness Development Institutions (READI) project. An older Volunteer, an engineer with many years of experience in business and management, he was assigned to prepare small-business start-up manuals for the project. READI was phasing out, and the manuals would provide guidelines and a written record of the knowledge READI had acquired in promoting small business development in Malawi.
As part of his Pre-Service Training, Giarrizzo spent a few days in three villages about 50 miles from the capital, Lilongwe, in the central portion of the country, where he would be living. Fortunately, his host in the village where he stayed had worked in Zimbabwe, spoke a little English, and was happy to accept Giarrizzo's offer of employment as his houseman in Lilongwe.
After working a while for Giarrizzo, the houseman asked his employer to hold most of his earnings as savings so he could start a chicken farm. Having heard from Peace Corps about the Trickle Up Program (TUP), a nonprofit organization that stimulates microenterprise development through start-up grants, Giarrizzo suggested that his houseman might want to join with other interested villagers and get TUP assistance to start his business earlier.
Giarrizzo applied to the organization to become a volunteer TUP Coordinator, and in the process, learned about a new enterprise-zone concept TUP was introducing, which would concentrate TUP supported businesses in a specific geographical area. His discussions with his houseman convinced Giarrizzo that the three villages in the Dowa district that had been the site of his home-stay training had the potential for becoming one of these enterprise zones.
In organizing this Hills of Dowa Enterprise Zone, or HODEZ as it came to be known, Giarrizzo was helped by his houseman, who was slated to be the next tribal chief and therefore had access to all the key people in the villages. Giarrizzo first met with the clan elders and village headmen to discuss the proposal with them and to gain their approval and support. The headmen next went to the Dowa District Commissioner and the local and district Malawi Congress party leadership to assure their support. Then, they sought approval from the staff of the Ministry of Agriculture and Ministry of Community Services, who all were eager to cooperate. Although Giarrizzo's READI supervisor, a non-Malawian, at first strongly doubted that the project would succeed, he finally approved the use of READI office space, supplies, and equipment, recognizing that Giarrizzo had the time, expertise and enthusiasm to get the project off the ground.
Ironing out the details involved frequent meetings with the village headmen and the government agriculture extension officer who directed the farm program. The headmen took the lead in choosing the participants and the 12 young volunteer "training facilitators," who would be working with Giarrizzo to prepare the community survey, business plans, and business reports TUP required.
Because Giarrizzo did not live or work in the villages and could only be there on occasional weekends, the planners recognized that someone else would need to be in charge on a regular basis. With the help of his APCD John Barbee, Giarrizzo secured funds from the Lilongwe Rotary Club to hire a former primary school teacher as a "field supervisor." Also with his APCD's assistance, he obtained a supply of training manuals from ICE to assist him with the project. He used them especially in providing guidance and advice to the field supervisor and to the training facilitators, who had less than an eighth-grade education but with his support, were able to complete the community survey required by TUP. After discussing the information with them, Giarrizzo prepared the required documents for the TUP application.
The first of three TUP conditional, start-up grants of $50.00 each were approved in June 1990. Most went for farm inputs to establish 39 farmers groups, each one consisting of five or more members who had to be from the same clan. The clan leaders selected those whom the community survey indicated were "the poorest of the poor." To participate they had to agree to work together farming the one acre of land each group received from the village chief and adhere to TUP requirements of developing and following a business plan and reinvesting 20 percent of their profits into their farming enterprises.
With the PCV's help, the community's leaders worked out a business plan for these farming cooperatives. They agreed they would all raise the same cash crop - hybrid maize - and their plan contained projected costs, income, and profits.
These producer coops eventually joined together into one large marketing cooperative, the TUP Enterprise Zone Farmers Association (TUPEZA), which enabled them to get a better price for their farm outputs.
The farmers groups used one plot for demonstration purposes, with the agricultural extension officer providing the training. As the groups received their grants of seed and fertilizer to get their own plots started, the training facilitators monitored their efforts and helped each group produce a business plan and business report.
In addition to the farmers groups, four micro-enterprise groups were started - a bakery, grocery store, irrigated vegetable garden, and a chicken farm to produce and sell eggs. These groups each consisted of at least five members, but their selection was more competitive. Instead of being "the poorest of the poor," they tended to be the better educated. They received grants based on merit, awards going to the most innovative business plans that met village needs.
To deal with finances, early in the project, the village headmen and other community leaders, under Giarrizzo's guidance, submitted an application to the Malawi Union of Savings and Credit Cooperatives (MUSCCO) in Lilongwe to begin the process of forming a local savings and credit cooperative society. Using less than $5.00 of the TUP $50.00 start-up grant to pay membership dues, they started the Nafisi Study Club, named for a small nearby river, and received ledgers, deposit books, and other materials from MUSCCO. They needed at least another $1,200 to become a full-fledged MUSCCO Society. Before the year ended, with the profits from the first farmers groups' harvest and the second TUP grant, they had more than enough money to set themselves up as the Nafisi Savings and Credit Cooperative Organization (SACCO).
In two months, this fledgling credit society became well established. With help from MUSCCO trainers, SACCO elected officers, appointed a board of directors, formed committees, set up an office in the community mud hut where TUPEZA was meeting, and hired a part-time manager.
By this time, the READI project had ended and Giarrizzo was now assigned to MUSCCO, giving him the advantage of being closely associated with the agency providing the technical training and materials to make SACCO possible. All business accounts were now kept in SACCO, and although not a TUP requirement, the farmers groups agreed to put their second TUP grants into their savings account to help capitalize the SACCO and provide enough credit to increase their farm production the following year.
Every one of the original farmers groups and micro-enterprise groups received a second grant. After a year, families in the farmers groups had doubled their annual incomes, while some of the non-farm businesses were earning in a month what the farmers were earning in a year.
Because of these initial success stories, the enterprise zone was extended to include seven more villages, with a total of 125 TUP-funded business groups. In the second year, after receiving assistance from a local soy processor, the farmers groups switched from growing hybrid maize to growing soybeans, a more profitable and more nutritional crop.
The original 39 farm groups expanded acreage from one acre to almost two-and-a-half acres in the second year. Sixty-five tons of hybrid maize were produced in the first year of the project and 85 tons of high-quality soybeans in the second year, despite the worst drought to hit Malawi in over 100 years.
Each one of the micro-enterprises also expanded. The grocery store added 30 to 40 new items, including children's clothing. The bakery, which used to bake bread in a hole in the ground, had a brick and metal oven built with outside help, and began to market its baked goods outside the village. The egg man had a second hen house built to accommodate more chickens and increase egg production, while the vegetable gardener began to supply the local hospital and secondary school with tomatoes and cabbages. With this increased economic activity, a new village market was built, and a local maize mill about to close down for lack of business resumed production.
Apart from generating income and consequently improving the economic life of the villagers, the Trickle Up Program brought concomitant educational, social and health benefits - an essential part of the Enterprise Zone philosophy. Now accustomed to working together, the villagers volunteered their time to add three new classrooms to a local primary school, using cement, lumber, and metal purchased with Rotary Club funds and a grant from Peace Corps' Small Project Assistance program. With additional space and increased family income to afford school fees, another teacher was brought in to handle the additional pupils. The villagers also used the construction materials to build a new well, which prompted the government to repair the old one, increasing the available water supply. Partly because of the
The 'hills of Dowa' enterprise zones project interest generated by the Enterprise Zone, the Ministry of Health for the first time provided a medical assistant to work in the villages.
When Giarrizzo ended his Peace Corps service, the PCV who was assigned to work with the Malawi Cooperative and Credit Society Organization succeeded him as TUP Coordinator. Unfortunately, a severe draught had weakened agricultural production, reducing farmers' income and savings. With the former supervisor no longer on the staff and the PCV unfamiliar with the procedures, the farmers failed to reserve the required savings and repay SACCO loans. Giarrizzo, who returned to Malawi for a visit, had to intervene, and through continued negotiations with the parties concerned, helped them reach a settlement.
The experience, however, underscored the need for PCVs to be careful about monitoring and documenting their activities, yet at the same time, cautious about assuming too much responsibility, lest they become indispensable. Repayment of loans continues to remain an issue, and TUPEZA has tried to compensate by demanding that first-year savings be forfeited if loans are not repaid.
Since leaving the Peace Corps, Giarrizzo has been trying to interest USAID in replicating HODEZ in other parts of Malawi, by means of a USAID project that provides Services for Health, Agriculture, Rural and Enterprise Development (SHARED). He was instrumental in organizing a group of people formerly associated with READI into the Village Enterprise Zones Association (VEZA), and returned to Malawi as a volunteer with the International Executive Service Corps to help write the USAID proposal. In 1993, VEZA became incorporated as a voluntary international organization headquartered in Chicago, with Giarrizzo as its first president.
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